Stanley Black & Decker Q2 2025 Earnings Call Highlights: Navigating Tariffs and Strategic Growth

Stanley Black & Decker Inc reported Q2 2025 revenue of $3.9 billion, down 2% YoY, due to slow outdoor buying season and tariff-related shipment disruptions. The company expects year-over-year gross margin expansion in both Q3 and Q4, aiming for a 35% gross margin in 2026, despite a $0.65 headwind related to tariffs. The DEWALT brand continues to show strong performance, with aerospace business achieving over 20% organic growth.

Stanley Black & Decker Inc. reported its second-quarter 2025 results on July 29, revealing a 2% year-over-year revenue decline to $3.9 billion. The slowdown was primarily attributed to a sluggish outdoor buying season and tariff-related shipment disruptions [1]. Despite these challenges, the company's professional DEWALT brand demonstrated resilience in the professional tools segment.

The company's adjusted earnings per share (EPS) reached $1.08, driven by a tax rate benefit, while GAAP EPS was $0.67. However, the stock closed at $73.93 on July 28 and experienced minimal movement in premarket trading following the earnings release [2].

Quarterly Performance Highlights

- Tools & Outdoor Segment: This segment, representing the majority of the company’s business, saw organic revenue decline 3%, with volume down 5%. The segment’s adjusted margin rate was 8.0%, down year-over-year due to tariff impacts, lower volume, and growth investments, partially offset by supply chain transformation efficiencies and pricing actions [1].
- Engineered Fastening Segment: This segment experienced a 1% organic revenue decline, with volume down 2% and a product line transfer to Tools & Outdoor representing a 3% headwind. These factors were partially offset by price (+1%) and currency (+2%) [1].

Tariff Impact and Mitigation Strategy

Tariffs represent an annualized gross impact of approximately $800 million, with a net impact of $0.65 on EPS for fiscal year 2025. Stanley Black & Decker is addressing these challenges by accelerating adjustments to the supply chain and taking a measured approach to pricing actions [1].

Strategic Initiatives

The company continues to execute its transformation program, which has delivered $1.8 billion in program-to-date pre-tax run-rate cost savings, with $150 million achieved in the second quarter alone. The transformation encompasses material productivity improvements, operational excellence initiatives, footprint rationalization, and complexity reduction [1].

Forward-Looking Guidance

For full-year 2025, Stanley Black & Decker projects total revenue to be flat to down 1%, with adjusted EPS of approximately $4.65 and GAAP EPS of $3.45. Free cash flow is targeted at approximately $600 million for the year [1].

Leadership Transition

The company announced a significant leadership transition plan, with current COO Chris Nelson set to become President and CEO effective October 1, 2025. This transition comes as the company navigates challenging market conditions while continuing to execute its transformation strategy [1].

Stock Performance

Following the earnings report, Stanley Black & Decker's stock experienced a notable decline of 7.8% during the afternoon trading session. The company’s shares have decreased by 14.4% since the start of the year, currently trading at $68.40, which is 37.9% below its 52-week high of $110.13 recorded in September 2024 [3].

Conclusion

Stanley Black & Decker is facing significant challenges due to tariffs and a slow outdoor buying season. However, the company remains focused on completing its transformation program, mitigating external pressures, and positioning itself for long-term growth through operational excellence and strategic investments in its professional tool brands. The leadership transition signals continuity and confidence in the company’s strategic direction.

References

[1] https://www.investing.com/news/company-news/stanley-black--decker-q2-2025-slides-revenue-dips-amid-tariff-challenges-ceo-transition-announced-93CH-4157246
[2] https://www.barrons.com/articles/stanley-black-decker-earnings-stock-price-1a0fee48
[3] https://www.indexbox.io/blog/stanley-black-decker-stock-drops-78-after-q2-earnings-report/